Switzerland on the Brink of a Climate Compatible Regulatory Landscape
So far, 2019 has been interesting for Switzerland’s environmental regulatory landscape – all indications point to this continuing as there is increasing pressure on the government to act on climate change.
Political parties are beginning to mobilize their campaigns ahead of October’s parliamentary elections.
In terms of environmental concerns, the efficient implementation of the Paris Climate Agreement into national law dominates the debate and the aim of making financial flows consistent with a low carbon pathway is generating controversy.
Revision of the Federal Act on the Reduction of CO2 Emissions (CO2 Act)
In this political environment, it does not come as a surprise that in February 2019 the Committee for the Environment, Spatial Planning and Energy of the Council of States (UREK-S) decided to introduce expectations for the financial sector’s contribution to climate protection within the revised CO2 Act. The committee added a provision to the draft that aims to align cash flows in a climate compatible way and has until August 2019 to provide detailed information on how it intends to achieve this goal. The Council of States will debate the draft in September 2019.
Rise in parliamentary interpellations and motions
Increasing political pressure is also reflected in the rise in parliamentary interpellations that demand binding regulations for financial market actors and ask for efficient management of climate change risks related to the financial sector. Several proposals ask the Federal Council to elaborate a Sustainable Finance Action Plan for Switzerland, echoing EU developments. The measures presented by the EU Commission in 2018 to implement the EU Commission Action Plan: Financing Sustainable Growth will have implications for the Swiss financial market and there are growing demands to ensure Switzerland’s competitiveness.
The Swiss Financial Market Supervisory Authority (FINMA) is of the opinion that the potential impact of climate change and other environmental risks to financial institutions merits closer analysis. In April 2019, FINMA and the Swiss National Bank joined the Network for Greening the Financial System (NGFS), a collaborative group of international central banks and supervisors committed to advancing the understanding and the management of climate change’s financial risks.
For a wider and in-depth overview of the Swiss regulatory framework, including the ongoing company law revision which proposes restrictions on executive compensation in listed companies and a gender quota for boards of directors and for executive boards, as well as the indirect counterproposal to the Responsible Business Initiative, please access the Policy Outlook tool.